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Sunday, July 6, 2014

FRB Atlanta — The Story of Money

Good resource. Well illustrated.

A highlight of the Monetary Museum is the story of money as told through an exhibit of artifacts, coins, and currency notes in sixteen display cases.

With gold nuggets and wampum and much more, you can trace the evolution of money from barter to modern currency along with the story of banking and money in America right up to the founding of the Federal Reserve System in 1913. Take a look at the unusual objects, rare coins, and beautifully detailed currency notes in our outstanding collection.

Just click on the sections below to learn the fascinating story of money.

It really wwould be good to have a bit more detail in the critiques. You have to understand that the vast majority would probably believe every bit of what you are saying is false--especially in the wake of the banking crisis and of the way they banks made of with astronomical sums of money. If someone will give some intelligent, not ad hominem critiques, I will gladly send them off to the producer of the documentary.

Edward griffin says that fractional reserve banking is dishonest, that it is a fraud. He says that people deposited gold in banks for safekeeping, in return for a storage receipt. They expected their gold to just sit safely in a vault until they came back to get it. Bankers then realized that they could trick customers by creating fake receipts for gold. None of that is true.

When you deposit money at a bank you are lending money to the bank. You are not depositing it for safekeeping. This has always been the case. Banks borrow money from depositors and lend money to borrowers. Where do you think banks get the money to lend, if they simply keep all depositors’ money sitting in a vault, waiting for them to come back and get it? How would banks be able to pay interest on deposits? Griffin’s argument doesn’t even make sense on a basic logical level.

If I deposit $100 at a bank and the bank lends it to someone, then my $100 isn’t sitting there in the vault - someone else has it. Say the borrower spends the $100 and someone else deposits it at a bank, which then lends it out. You can begin to see how one initial deposit can lead to a whole chain of lending and deposits, and why your original deposit is not just sitting in the bank waiting for you to come and collect it.

People say this is nonetheless a fraud because banks promise to redeem checking deposits with cash on demand (i.e. give cash to checking account depositors on demand). That’s not really true. Banks promise to meet most requests for cash immediately, or on the same day, but require advance notice for large withdrawals and can ask depositors to come back at a later date if they are unable to provide all the cash required immediately. They may also provide depositors with a document which allows them to withdraw the cash from a different bank company.

If a bank fails to meet its promises to depositors then this would simply be like a company defaulting on a debt – i.e. not being able to repay borrowed money as required. Defaulting on debts is not fraudulent.

Solvent banks do actually have enough ‘money’ to repay checking account depositors, but they just don’t have it all in the form of cash. Instead it is held in the form of bonds and other financial assets. In order to repay all checking account depositors with cash at the same time (as in the case of a bank run), the bank would have to sell its bonds and other assets for cash. This can take time, and the process of selling large quantities of such assets can cause their value to plummet, leaving the bank with liabilities larger than the total value of their assets. This is how a bank liquidity crisis (an inability to pay or roll-over all short term debts at the same time) can potentially lead to a solvency crisis.

Bank runs occur not because depositors suddenly find out that their bank doesn’t have enough cash in its vaults to pay all of them at once, but because depositors suddenly lose confidence in the value of the bank’s assets (i.e. in the solvency of their bank), usually as the result of a financial crisis or economic depression. As such bank runs can potentially be self-fulfilling when there is a widespread loss of confidence in the economy.

Rather than selling off its assets in response to a bank run, a bank may simply to try borrow to cover short term withdrawals, or try to tempt depositors back with higher interest rates on deposits. In the worst case however, a bank may find itself unable to borrow either from depositors or from other banks, when there is a panic. In this case potentially widespread destruction of financial wealth can be avoided by having a central bank which lends against good collateral (and against what would be good collateral outside of a panic), stopping liquidity crises from turning into solvency crises.

Also, deposit insurance serves to give confidence in bank deposits, creating a solid base for lending and borrowing in the economy.

In return for state-backing of deposit insurance, and the backstop of the central bank, the banking sector should be regulated and stopped from engaging in risky practices.

Others have proposed a wholesale transformation of banking to solve its basic problem, such as the introduction of 'full reserve banking' backed by the state, or fully nationalized banking. However there is a lot of debate about whether such proposals would even work.

It is true that the Federal Reserve System consists of public parts and quasi-privately-owned parts.

The System consists of the Board of Governors, which is a federal government agency based in Washington DC, The Federal Open Market Committee (which consists of 7 Board of Governors members and 5 presidents of the regional Reserve Banks) and 12 regional Reserve Banks located in different cities. You can read more about the System and its structure here:

http://en.wikipedia.org/wiki/Federal_Reserve_System

Nationally chartered banks and some local banks are required by law to become members of the Federal Reserve System. They have to buy stock in their local Reserve Bank equal in value to 3% of their total capital. They also have to keep another 3% of their capital 'on call'. Whenever their capital increases they have to buy more stock in the Reserve Bank. In return for this they get some say in electing the boards of their Reserve Bank, and they receive a 6% dividend on their paid-in capital. Beyond this 6% dividend, all profits made by the regional Reserve Banks are paid to the Treasury. Member banks are not allowed to sell their stock in their Reserve Bank, and can not transfer it to anyone else.

The Board of Governors and the FOMC set monetary policy and the regional Reserve Banks carry it out. The day-to-day operating activities of the regional Reserve Banks are also overseen by the Board of Governors.

Many consider this structure to be a problem, as the Fed combines public with private. So why not simply nationalize the Fed? Why 'End the Fed'?

The video you linked to does not explain why it is so keen on "ending" the Fed, rather than fully nationalizing it, despite the fact that most of its complaints are based on the issue of private ownership in the regional Reserve Banks.

The video also completely fails to mention that the Bank of England was fully nationalized in 1946 and is fully owned by the UK Treasury. It doesn't mention this fact as it doesn't fit well with its grand conspiracy theory narrative.

The video also fails to mention that practically all central banks are fully owned by their governments, and that the structure of the Fed is unique.

The reality is that the "End the Fed" movement is largely an extreme right-wing movement full of gold-obsessed Rothbardians and Birchers and the like, who believe that the government has no right to issue 'paper money' They don't really care whether the central bank has private shareholders or is fully public - they just hate it because they hate 'paper money'.

There are very valid arguments to be made about reforming or completely changing central banking, and about the issue of political 'independence'. But those arguments are not helped by uninformed theories and poorly researched 'documentaries'.

The fundamental issue is an orderly payments system to ensure that payments always settle. Without a central bank, liquidity issues have arisen in the past that have resulted in panics preceding depressions as liquidity dried up, defaults mounted, and liquidations were forced.

Central banking with the cb as the lender of last resort corrected that defect in the banking system by providing a secure and orderly payments system that provides settlement in the currency at par to all solvent members of the system, regardless of other circumstances.

Deposit insurance backed by the government protects small savers from loss in the event of insolvency, and large savers are provided the option of T-bills, which are pretty much cash equivalents.

As a result, there is now relatively little risk in the banking system to bank customers and banks are also protected from systemic risk resulting from interrelated obligations.

It may be objected that risk is simply transferred to the government and thereby to the public. That is true, and it's the reason that bank regulation is put in place. It wasn't the regulations fault in the last crisis but rather the regulators ideological choice to abandon regulation in the interest of a "free market."

But when liquidation threatened to bring down the US and global economy, they chickened out since they knew they would be tarred and feathered if they did nothing and just let the global economy collapse from the weight of debt that could could not be serviced. Governments will always do this, sooner or later, or they will lose power to one that will.

Those wanting to end central banking need to provide a specific alternative to the current payments system that addresses these issues as effectively and efficiently, or admit that their preference is liquidationism in the event of a liquidity crisis such as recently occurred.

Thanks Y and Tom for your efforts. These are interesting posts, and of course it goes without saying that the documentary doesn't understand central banking, but they do not address the real points at issue in such a documentary, the things that make people suspicious, the secrecy, the corruption, etc. There is a split in the country between those who smell a rat and those who "explain" that it really isn't what it seems, without addressing the rat smell. What you've written I can't send to the maker of the documentary--it would not enlighten him at all nor would it provoke a desire to know more.

Thanks Y and Tom for your efforts. These are interesting posts, and of course it goes without saying that the documentary doesn't understand central banking, but they do not address the real points at issue in such a documentary, the things that make people suspicious, the secrecy, the corruption, etc. There is a split in the country between those who smell a rat and those who "explain" that it really isn't what it seems, without addressing the rat smell. What you've written I can't send to the maker of the documentary--it would not enlighten him at all nor would it provoke a desire to know more.

"There is a split in the country between those who smell a rat and those who "explain" that it really isn't what it seems, without addressing the rat smell."

I tried to explain some basic aspects of banking which videos like the one you linked to usually completely fail to explain at all. I agree that there is something rotten going on, but it is important to identify the right target and not get distracted and confused by people who want to opportunistically push their own political agendas.

"End the Fed" types and others like them tend to focus on the wrong target, and they often do so for ulterior motives.

For example, 'libertarian' Austrian school types (Rothbardians, Ron Paulists, etc) start with a basic hatred of government, a belief that the government doesn't have the right to create money, that the only real money is gold, and a love of deflation, and they then attack the Fed and its history as a means to further that particular political agenda. They will talk and talk about how bad it is that the Fed is "privately owned", but never suggest that it should be nationalized, because they don't really care about the fact that it is privately owned - they just hate 'paper money', they hate the government and they want the only money to be gold. So all the complaining about private ownership of the Fed turns out to just be a smokescreen to advance another anti-government agenda.

Henry, I have tried to explain this to friends of mine that are conspiracy theorists and even with their best efforts, they cannot seem to make the shift.

It's what they want to believe because it is part of the way they picture the world to themselves and find agreement with other on it. It would mean a disrupting their worldview and their social structure, and they strongly resist that.

I have explained to them that many of their points are well taken even with the correct explanation. Conspiracy theory just distracts from the actual issues and lowers their credibility. But they resist that line of argument, too.

Like Libertarians, and some of them are Libertarians, is matter of fundamental outlook based on a value structure and assumptions for modeling reality conceptually.

Debate ends at disagreement over key fundamentals like criteria.

Of course people that aren't conspiracy theorists believe this stuff, too, and some of the work at central banks.

Very good points, thank you. Identifying the right target is key. It would be good if you could include some remarks that identify and hit it.

I think two points would be helpful to clarify. Explain plausibly they why of the clearly conspiratorial origins of the Fed. Reserve act--the train ride, the anonymity, etc. What was the real--not theoretical--sufficient reason for such secrecy?

The question of money as debt. The creation by private banks of money "out of thin air" and then charging interest for it needs to be explained and not explained away in terms that the average person can grasp without feeling that there is still something going on that is "smelling like a rat". The bankers always seem to come out smelling like a rose, after all, while the population suffers serious consequences. There are also sayings such that if the Americans ever understood how money was formed they would rebel overnight and lynch the bankers (or some such formulation).

The financialization of the economy, the incredible corruption of the banks, the consolidation of the banking industry, and so on, are problems that are too visible.

Another serious matter is the predominantly Jewish make-up of the Wall St. powerhouses, above all Goldman Sachs and people like Blankfein and Bernanke. Like it or not, people smell conspiracy, just as they do with the predominantly Jewish make-up of the neocons in Washington, or in the media and in the consolidation of the media.

Too much ignorance and too little effective countering and education. Also, MMT'er tend to give the impression that if only certain key facts were understood all would be well, which is implausible, to put it mildly.

Michael Hudson: However, the leading bankers sought to use the crisis as an opportunity to grab power for Wall Street, away from the Treasury. In this sense, the Fed was founded in large part to take monetary control away from Washington’s elected officials and appointees, and privatize the supply of money and credit.

So its place in the U.S. financial and economic structure is to allocate credit, primarily to serve Wall Street financial interests. That explains the insistence on the financial class here and abroad in insisting on an “independent” central bank. It means that instead of serving the public interest, it serves the interests of the banking class. The hoped-for transformation of commercial banking into long-term industrial banking was not achieved.

Can we imagine the global economic system without Federal Reserve today? If yes/no, why?

As David Kinley’s book for the National Monetary Commission pointed out a century ago, nearly all the financial functions performed by the Fed already were performed by the national Treasury. In more recent times, Milton Friedman and his University of Chicago colleagues suggested that the entire Fed could be reduced to a single desk inside the Treasury. The “Chicago Plan” of the 1930s urged Treasury control, as does Congressman Dennis Kucinich’s current bank reform.

There is no inherent need for a monetary agency to exist outside of the national government, except to serve the interests of the financial class as distinct from those of government, industry and labor. And the banking sector’s business plan is to load down real estate, labor, industry and the government with as much interest-bearing debt as possible...

The Federal Reserve is antithetical to the classical liberal aim of using financial and tax policy to minimize the economy’s cost of production. From the Physiocrats and Adam Smith through Ricardo, John Stuart Mill and the Reform Era, the aim was to minimize land rent (by either taxing it away or nationalizing the land), monopoly rent (by price regulation or by keeping natural monopolies in the public domain) and interest or other financial charges that were payments for special privilege.

Acting on behalf of the banks, the Fed has sponsored the un-taxing of real estate and monopolies, as these have become the major bank customers. And by deregulating Wall Street, the Fed has underwritten the overgrowth of unproductive credit – credit extended not to finance industrial capital formation, but simply to speculate and to transfer ownership of assets already in existence.

The guiding philosophy of the Fed is to inflate prices of assets in order to expand the market for real estate loans (which account for some 80 percent of bank loans in the United States), corporate takeover loans and speculative “casino capitalist” loans for foreign-currency and interest-rate arbitrage.

1. The bankers desire to privatize the money authority insofar as possible in order to increase bank profits, just like private entrepreneurs and firms want the government to stay out of the marketplace and leave profit-making to them. This is in keeping with capitalism as the basis of an economic system.

2. Bankers and others business people also have a financial interest is pushing risk and negative externalities onto the public sector.

3. The American people generally prefer to reduce the role of government in the marketplace.

4. The American people generally expect government to protect them from financial and economic contraction and certainly from collapse.

5. The question then becomes one of the proper role of government and the private sector in finance and the economy. This requires some compromise of limited government and laissez-faire with populism.

6. This compromise is continually being negotiated politically and those with wealth and power have the strongest voices most of the time, although at times of crisis, there is often a demand on the part of the public that includes more government participation in the economy. As the crisis passes, the intensity of that need decreases and more limitations on government are re-introduced and there is more demand for privatization.

7. So this is an on-going dialectic that is never resolved in the tension between capitalism and democracy. Just as it is not possible to eliminate business and financial cycles in a capitalist economy, so too, it is not possible to finally resolve this dialectical relationship between capitalism and democracy.

8. The problem is that there are always tradeoffs regarding wealth and power in economics and politics, which means that there are winners and losers depending on how institutional arrangements are structured. So there are contradictions backed in that keep the dialectic going among interests.

"Explain plausibly they why of the clearly conspiratorial origins of the Fed".

A potted history, as far as I can remember off the top of my head:

It was generally thought at the time that a central bank was needed to stop the wild financial ups and downs that had been experienced throughout the 19th century and early 20th century (including under various versions of the gold or bimetallic standard monetary system).

There were two basic proposals for a central bank at the time. One was that there should be a federal bank wholly owned by the government. The other plan, which the Jekyll Island bankers came up with, was that the central bank should be privately owned but have certain state-like powers, such as the power to create money which the Treasury would accept in payment of taxes.

The banker's plan was based on the previous model of private clearing houses. These were set up by banks to provide loans to their members in times of stress. However they did not issue US coin, whereas the proposed Federal Reserve would be able to issue US currency in the form of notes and deposits (coin remained a monopoly of the Treasury).

The plan which was adopted by Congress combined aspects of the two. Central control and oversight was given to a government agency (The Board of Governors), but the regional Reserve Banks were organized as quasi-privately owned corporations, under laws determining what they could and couldn't do.

Private banks would have to contribute to the capital of these Reserve Banks by paying in a part of their private capital in the form of bullion, coin and government bonds. This capital would then belong to the Fed. In return the private banks would get a say in how these Reserve banks were run and would get a seat in the committee which determined the monetary policy of the Fed.

Over time the structure changed a bit and the Board of Governors became much more dominant. The Board now wholly determines monetary policy, although the banks are still represented within the FOMC.

During the Great Depression and WWII the Fed was brought almost completely under the control of the Treasury, and was for example required to keep the interest rate on government bonds low and stable throughout WWII. In the 50s however the Fed regained a large degree of political independence, such as the power to determine the overnight interbank interest rate without too much interference from the the government. It was thought by some that the Fed needed this independence to ensure the confidence of markets in its policy and to 'de-politicize' monetary policy.

I think two points would be helpful to clarify. Explain plausibly they why of the clearly conspiratorial origins of the Fed. Reserve act--the train ride, the anonymity, etc. What was the real--not theoretical--sufficient reason for such secrecy?

The first is an easy one to answer. The bankers wanted to avoid another bank panic of 1907 when J. P. Morgan had to step and form a coalition of bankers willing to act as the lender of last resort to save the financial system from collapse. This convinced the bankers that government participation via a central bank that would take on the risk of lender of last resort was necessary. So they needed to negotiate a deal politically.

They did not want a nationalized central bank, but one in which they would participate and have seats at the table. This became the hybrid of public and private components established by the Federal Reserve Act of 1913. Subsequently, the bankers' power was somewhat eroded through amendments to the act but it is still a public-private hybrid.

Naturally bankers wanted to negotiate the deal quickly and behind the scenes to lock in the best deal they could. They were pretty successful in this regard, although the FRA was subsequently amended to make it less favorable to them. But that the time, it was regard as the best compromise they could get between public and private that would give them maximum control consistent with reducing their risk.

But it was also a better deal for the public than free banking since it created an orderly payments system and a lender of last resort that would reduce the likelihood of bank panics that were not uncommon previously. So both sides gained from the compromise. The bankers got a system that they designed, and the government got a measure of control over banking for assuming some of the risk.

So while it was somewhat "conspiratorial," it was probably less conspiratorial that the meeting of the heads of the energy companies with the newly elected Vice President Dick Cheney subsequent to the 2000 election. The public got nothing from that, and likely an outcome of it was the Iraq War, which was clearly about the 15 trillion dollars worth of untapped petroleum. This is the way politics still gets done today. Wealth, power, and interests are the essence of politics in a republic, as Aristotle noted in Politics millennia previously.

The question of money as debt. The creation by private banks of money "out of thin air" and then charging interest for it needs to be explained and not explained away in terms that the average person can grasp without feeling that there is still something going on that is "smelling like a rat". The bankers always seem to come out smelling like a rose, after all, while the population suffers serious consequences. There are also sayings such that if the Americans ever understood how money was formed they would rebel overnight and lynch the bankers (or some such formulation).

This question is a bit more involved that the first.

There is a lot of misunderstanding about money and debt. MMT clears this up, but it's not easy from most people to understand this since they think of money as a thing rather than an idea.

There is no "natural money." Naturalistically, there are only things that people value in exchange (barter), and that valuation has both subjective and objective aspects.

Money has a different function than commodities used in barter. Money is often conceived as a "universal commodity" — something everyone wants — that naturally fits as a medium used to overcome the problem of coincidence of wants characteristic of barter exchange. If there is something that people almost universally desire, then it could serve as the medium that overcomes this difficulty. Historically this has been identified as either necessities like grain or precious objects like metals and gems that are thought to have "intrinsic value" objectively.

This seems intuitively obvious to most, and people who haven't studied theory of money have a strong tendency to accept it as so. So do some monetary theorists, who regard it as historical or intuitively evident. Moreover, it is taught in most Econ 101 texts. So overcoming this bias is a challenge.

Adding to this challenge, most people think of money chiefly in terms of cash, i.e., money things. But money is not a thing. It is an idea and one of the great ideas in the history of human social development, comparable to the invention of the wheel. Perhaps the spear or bow might be a better comparison since money, too, can be used as a tool or as a weapon.

Historically money functioned initially as a unit of account and record of debt. Money things like coins only came later. The money thing was not a commodity but rather an IOU, which constituted what came to be understood legally in terms of a contract based on customary and then legal obligation and accounting procedure for keeping track.

Money things came to be used in spot settlement of a obligation, either directly in exchange or in satisfaction of a previous promise to repay not in kind but in an acceptable medium. But the function was as before in terms of a settlement contract and clearing accounts.

Money is fundamentally a cultural artifact that grew into a complex institution. An aspect of this institution was the custom of associating a transferable IOU with a money thing as a social construct that would be generally accepted in trade and commerce, like cowrie shells. State money, represented by a money thing like a coin, came much later.ˇ

Once it is is established that there is a crucial difference between money and money things, then it becomes possible to explain about why "debt-free money" is an oxymoron. Money is an IOU and as such it is a debt IOU on one party's balance sheet (issuers of the IOU) and a credit on another's (the holder of the IOU). The issuer agrees to accept its own IOU in settlement of obligations to it. Thus state money is a tax credit that taxpayers need to obtain to settle their tax obligation to the state.

When people speak of debt-free money, what they usually mean is money things issued without interest payments associated with it, like Lincoln's greenbacks.

But most modern transactions settle in a payments system, either through netting, or in the government's payment system. In this case, money is simply a unit of account that appears on accounting statements, an accounting entry rather than a "thing." There is no inherent need to associate interest with these accounting entries either. Greenbacks are necessary for interest-free money.

All the money in an economy could be issued this way either by governments, or by banks. The question they becomes how the money gets into the economy.

There are a lot of options for doing this, from government being the sole issuer and issuing a certain amount per capita per year to all that qualify as citizens, to free banking, with banks issuing their own bank money.

Whatever system is adopted the money has to come from somewhere. It comes either "from thin air" or a commodity is used such as gold coins and paper receipts and units of account that are convertible into that commodity at a fixed rate.

There are also kinds of consequences of this choice of systems, with tradeoffs and winners and losers. Most people have no conception of this or of what their relative position would be in the system. In fact most people have a completely wrong view of this and they would find themselves at a disadvantage in the system.

MMT studies various monetary systems in terms both construction and result.

The upshot is that there are reasons that the different systems developed in the way they did and why different countries have similar but different systems. The systems have to similar enough to allow for interaction but they can be significantly different in construction and institutional winners and losers.

There are essentially three major options. Government as the sole issuer, banks as the sole issuers, and a combination of the two. There are advantages and disadvantages of each wrt different interest groups.

Generally speaking, those who prefer "big government" opt for government only. those that favor no government or very limited government prefer private issuance only or the use of bullion exclusively, those that advocate a balance of public and private interests prefer a system in which both government and banks participate in the process of money creation.

Within this general framework there are many possible options, again with tradeoffs and winners and losers.

This is what MMT deals with as a monetary theory and description of various monetary institutions. Money is an institution and there are many ways of institutionalizing it through different institutional arrangements, but fundamentally modern money is chiefly a legal construct as well as an accounting construct. There are different ways of arranging the rules and those arrangements involve tradeoffs and winners and losers.

So it is really necessary to think things through carefully before embarking on changes to a system that is already working however problematically it may be. Trying to fix perceived problems without taking the system as whole into account could well have unintended consequences that one would regard as unfavorable to one's interests. The adoption of a common currency without the context

Moreover, the perfect is the enemy of the good. There is no perfect system for all time. Context counts. Now that the world is entering the global age the opportunities and challenges are immense and require new thinking. The US is at the center of the global financial system so what the US does extends far beyond the nation's borders. This has to be taken into consideration, too. If the US wishes to preserve and extend its soft power, it cannot be seen structuring the system to its advantage at the expense of other nations and peoples.

The upshot of this is that while interest is not necessary operationally it developed to play a very specific role wrt to risk management. Risk is inherent in finance and if interest is eliminated then some other tool for risk management has be developed, as in Islamic banking, for instance, since payment of interest is forbidden in Islam as it was previously in Christendom, which is a reason that Jewish people became the lenders at that time, since they were not under that religious obligation and could undertake risk management using interest as a tool.

One of the issues wrt to interest-free money is issuance of interest bearing securities by governments. Payment of interest is not necessary operationally under the existing monetary arrangements, for example, so seemingly it constitutes a subsidy for saving. However, it also creates safe assets in the sense of default risk free saving vehicles. Yields on these are also used as benchmarks that give the financial system stability. While interest-bearing securities could be eliminated that would also increase the level of risk in the system that would need to be addressed in another way, or a riskier environment would be the consequence. Most people haven't thought this through and so are not even aware of it.

Again consequences, intended and unintended, as well as tradeoffs and winners and losers.

The financialization of the economy, the incredible corruption of the banks, the consolidation of the banking industry, and so on, are problems that are too visible.

Attributable to failure of regulators to understand the issues and address them. Recently this was a conscious choice based on ideology to let the market discipline itself.

The tools were in place. They were intentionally shelved. Some of this was owing to political capture by vested interests, some owing to intellectual (ideological) capture, and some due to sheer ignorance, e.g., of control fraud, as explained in detail by Bill Black.

One last question: how to separate a proper understanding of central banking and fed on the one hand, and the globalist "consipiracy" of say, David Rockefeller and his Trilateral society, who candidly admits that they want a one world gov't. There are other, like Warburg, who have said the same, and of course there is the famous book Tragedy and Hope. It is such items that fuel such things as the documentary.

Another serious matter is the predominantly Jewish make-up of the Wall St. powerhouses, above all Goldman Sachs and people like Blankfein and Bernanke. Like it or not, people smell conspiracy, just as they do with the predominantly Jewish make-up of the neocons in Washington, or in the media and in the consolidation of the media.

This is like counting up the number of Jewish musicians relative to non-Jewish musicians and seeing a conspiracy.

Jewish people tend to excel at what they go into and they generally choose either the professions, sciences or arts rather than, say, the military.

One could count up the number of Black athletes relative to whites and see a conspiracy there, too.

This is the problem with conspiracy theories. They generally depend on logical fallacies like hasty generalization or false causality, or else cognitive bias like confirmation bias.

One last question: how to separate a proper understanding of central banking and fed on the one hand, and the globalist "consipiracy" of say, David Rockefeller and his Trilateral society, who candidly admits that they want a one world gov't. There are other, like Warburg, who have said the same, and of course there is the famous book Tragedy and Hope. It is such items that fuel such things as the documentary.

I have concluded that there is some truth to this and also that it has tended to be discounted owing to the associated conspiracy theory.

If one reads careful thinkers that document their work like Noam Chomsky, Michael Hudson, Bill Black and other lie them, one comes to the conclusion that neoliberalism as the dominant political and economic paradigm globally tends toward a superclass whose objective is to shape the globalization process and that banking and finance are integral to this as the allocators of capital.

I regard this as one of the major challenges of our time. It is doubly serious in that it also involves collusion of the superclass and governments, or the capture of governments by the superclass.

This is the subtext of Piketty et al's work in inequality in my view.

Not enough attention is being paid to this, and I'm afraid that the conspiracy theorists are creating more distraction than shedding light.

Well said, Tom.I completely agree about the neocons. As for the Rockefeller-Brzezinski group, they do not always see eye to eye with the neocons, who are, after all, very pro-Likud, who have their own agenda. I think these are the two poles that govern the US. The Zionists are actually a rather Nazi-like bunch. In fact I would even say that they are Jewish nazis, paradoxical as that may sound. They will destroy Israel. At any rate, in the US the Israel lobby is a force to be reckoned with. Russell Kirk once remarked that when it came to US-Israel relations it was hard to tell which was the dog and which the tail. They coincide in Ukraine because the Brzezinski faction is violently anti-Russian.

As for Chomsky, I'm ambivalent. Gilad Atzmon has a strong article against him at RT news right now. I think he also turns a blind eye to the events of 911, but that's understandable in his position: it would be like handling dynamite. He plays a pretty safe progressivist role.-